Google to win its lawsuit against the Hungarian tax office

The Advocate General of the Court of Justice of the European Union (CJEU) has announced that Google was right in the main points of its lawsuit started against Hungary because of the advertisement tax.

This is not the final verdict, but it is very rare that the EU Court does not make the decision that has been suggested by the Advocate General, according to hvg. CJEU has already declared during the summer that the advertisement tax was not unlawful. However, some elements of it are debatable – this is the case in which Google is about to win.

The legal debate is about the 2016 version of the tax. Based on this, all companies that advertise on the internet in Hungarian (e.g. on Hungarian portals) have to pay advertisement tax. If a company wanted to publish an advertisement, it was supposed to register as a company subject to the advertisement tax. Otherwise, it was penalised.

In 2017, a fine of one billion HUF (approximately 3,333,333 USD) were imposed on Google for failing to do so.  

According to the Hungarian tax authority, Google intentionally omitted this obligation, and this way, it gained competitive advantages against domestic, legally functioning advertisers. Google has turned to the EU Court because it pled that the punishment was way too much (2000 times more) compared to the punishment of domestic companies that are only obligated to do the general registration. These interior firms get registered automatically by the company registry. So, only foreign companies get penalised. 

The proposal of the Advocate General states that if the implementation of the profit tax is bound to the Hungarian language, it does not violate EU laws. Introducing obligation for registration does not confront the laws of the EU, either.

The quantity of the punishment is disproportionate, though, and violates the freedom of service provision.

Limitation of legal remedy is also an illegal limitation of service provision, Julianne Kokott Advocate General concluded.

You can read about an interesting scandal of Google from 2017 in Hungary here.